EMEA News
Bumpy Ride for Bunkers Set to Continue as Latest OPEC Rumours Trigger Yet Another Rebound of Crude Futures
The recent bumpy ride for bunkers looks set to continue after the Organization of the Petroleum Exporting Countries (OPEC) Thursday once again indicated it might be willing to discuss output cuts, and once again oil prices have rebounded as a result.
West Texas Intermediate prices rebounded above $27 on Thursday after dropping 4.5 percent to $26.21; Brent crude futures rose 17 cents to $31.01 per barrel.
The trigger was a Wall Street Journal journalist paraphrasing Suhail bin Mohammed al-Mazrouei, energy minister for the United Arab Emirates, in a tweet as saying that "OPEC is ready to cooperate on a cut."
Twitter users soon pointed out that UAE "does not speak for all of OPEC," while others labelled it "careless" and "irresponsible reporting," but this did not prevent a market jump.
Al-Mazrouei, who had originally made comments to Sky News Arabia, added that low prices were forcing non-OPEC members to cap production but that cuts would require total cooperation from everyone.
USA Today believes any positive sign from OPEC will be a relief to U.S. energy producers, many of whom could be filing for bankruptcy this year; but Bjarne Schieldrop, chief commodity analyst at SEB in Oslo, suspects a new wave of trouble is brewing, in the form of Iran offering its crude to Asia at a discount, in order to undercut rival OPEC producer Saudi Arabia.
This, he says, appears to have heightened tensions between the two countries: "There's a price fight within OPEC for Asian market share, and there are worries that storage capacity is going to be breached."
The recently rumour-driven volatility in crude has been closely echoed in the bunker markets, with data from Ship & Bunker showing the price spread for key grade IFO380 over the last month alone in Singapore, Rotterdam, Houston, and Fujairah has been $30, $43.50, $38, $37.50 per metric tonne (pmt) respectively.
While such dollar fluctuations were quite normal in relatively recent memory, that was when bunkers were around $600 pmt and it represented a movement of around 6 percent.
At Thursday's price of between $125 and $155 pmt across the four ports, such fluctuation represent a movement of around 26 percent.
Earlier this week a Goldman Sachs Group Inc. analyst predicted that oil would drop into the teens as a precursor of a market rebalance later this year.
